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EXHIBIT 10(D)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (hereinafter referred to as the "Agreement") is
made effective as of this 1st day of July, 1996, by and between VERSUS
TECHNOLOGY, INC., 0000 Xxxx Xxxx Xxxx Xxxxx, Xxxxxxxx Xxxx, XX 00000
(hereinafter referred to as the "Corporation"), a Delaware corporation
qualified to do business in Michigan, and Xxxx X. Xxxxxxx of 0000 Xxxxxxx Xxxx,
Xxxxxxxx, XX 00000 (hereinafter referred to as the "Employee").
IN WITNESS WHEREOF, the parties hereto for good and valuable consideration
the receipt and sufficiency of which is hereby acknowledged and intending to be
legally bound agree as follows:
SECTION 1. Employment. The Corporation hereby employs the Employee and
the Employee hereby accepts employment with the Corporation upon the terms and
conditions hereinafter set forth.
SECTION 2. Term. The term of this Agreement shall be for a period of six
(6) years, commencing as of the effective date hereof.
SECTION 3. Duties. The Employee is engaged as President and Chief
Executive Officer of the Corporation, and the Employee agrees to perform such
other executive services as shall from time to time be reasonably assigned to
him by the Board of Directors of the Corporation. During the period of
Employee's employment hereunder, if he is a management nominee for membership
on the Board of Directors of the Corporation, he will agree to so serve.
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SECTION 4. Compensation. During the first twelve (12) months of the term
of this Agreement, the Corporation shall pay to the Employee a base salary at a
rate of not less than One Hundred Thirty Thousand Dollars ($130,000) per annum,
payable in equal installments as nearly as practicable on the fifteenth and
last days of each month, in arrears. The base salary for the second twelve
(12) months, and for each succeeding twelve (12) month period during the term
of this Agreement, shall be 1.10% of the base salary in effect for the
preceding twelve month period. In addition, the base salary may be increased
from time to time, over and above the foregoing rate of increase, in accordance
with normal business practices of the Corporation, at the discretion of the
Corporation's Board of Directors, and if so increased, shall not thereafter
during the term of this Agreement be decreased. Compensation of the Employee
by salary payments shall not be deemed exclusive and shall not prevent the
Employee from participating in any other compensation or benefit plan(s) of the
Corporation. The salary payments (including any increased salary payments)
herein shall not in any way limit or reduce any other obligation of the
Corporation hereunder, and no other compensation, benefit or payment hereunder
shall in any way limit or reduce the obligation of the Corporation to pay
the Employee's salary hereunder.
SECTION 5. Fringe Benefits. For the term of this Agreement the
Corporation shall maintain in full force and effect, and the Employee shall be
entitled to continue to participate in, all of the Corporation's employee
benefit plans and arrangements in which the Employee is a participant or may
become a participant, or alternatively, the Corporation shall maintain for the
Employee's benefit, plans or arrangements providing the Employee
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with at least equivalent benefits thereunder (including without limitation, if
the Corporation has adopted any such plan, a pension and retirement plan and
arrangement, a supplemental pension and retirement plan and arrangement, stock
option plan, life insurance and health-and-accident plan and arrangement,
medical insurance plan, disability plan, survivor income plan, relocation plan
and vacation plan). The Corporation shall not make any changes in such plans
or arrangements which would adversely affect the Employee's rights or benefits
thereunder, unless such change occurs pursuant to a program applicable to all
executives of the Corporation and does not result in a proportionately greater
reduction in the rights of or benefits to the Employee as compared with any
other executive of the Corporation. The Employee shall be entitled to
participate in or receive benefits under any employee pension benefit or
employee welfare plan or arrangement made available by the Corporation in the
future to its executives and key management employees, subject to and on a
basis consistent with the terms, conditions and overall administration of such
plans and arrangements. Nothing paid to the Employee under any plan or
arrangement presently in effect or made available in the future shall be deemed
to be in lieu of the salary payable to the Employee pursuant to Section 4.
SECTION 6. Extent of Service. The Employee shall diligently and
competently devote his full business time (with allowances for vacations and
sick leave), attention, and energies to the performance of his duties under
this Agreement and shall exert his best efforts in furtherance of the business
of the Corporation; provided, however, that Employee may serve as a director
of other corporations or entities and may engage in other activities to the
extent that they do not
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inhibit the performance of Employee's duties hereunder, or conflict with the
business of the Corporation or affiliates.
SECTION 7. Expenses. The Employee is authorized to incur reasonable
expenses for promoting the business of the Corporation, including expenses for
meals, travel, and other similar items. The Corporation shall promptly
reimburse the Employee for all such expenses from time to time, provided that
such expenses are incurred and accounted for in accordance with the policies
and procedures established by the Corporation from time to time.
SECTION 8. Counsel Fees and Indemnification.
(a) The Corporation shall pay, or reimburse Employee, the reasonable fees
and expenses of Employee's personal counsel for professional services rendered
to Employee in connection with this Employment Agreement and matters related
thereto.
(b) In the event that (i) the Corporation terminates, or seeks to
terminate this Agreement, alleging as justification for such termination a
material breach by Employee or a cause, or causes, set out in paragraph 9(b)
hereof; Employee disputes such termination or attempted termination; and
Employee prevails in whole or in part, or (ii) Employee elects to terminate his
service hereunder pursuant to paragraph 9(a) of this Agreement; the Corporation
disputes its obligations to pay the Employee's base salary and benefits as
provided in paragraph 9(a); and Employee prevails in whole or in part; the
Corporation shall pay, or reimburse to Employee all reasonable costs incurred
by Employee in such dispute, including attorneys' fees and costs.
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(c) The Corporation shall indemnify and hold harmless the Employee, to the
maximum extent permitted by law, against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees incurred by
Employee, in connection with the defense of, or as a result of any action or
proceeding (or any appeal from any action or proceeding in which Employee is
made or is threatened to be made a party by reason of the fact that Employee is
or was an officer or director of the Corporation, or is or was an officer or
director or majority shareholder of Olmsted Engineering Co., regardless of
whether such action or proceeding is one brought by or in the right of the
Corporation or Olmsted Engineering Co., to procure a judgment in its favor (or
other than by or in the right of the Corporation or Olmsted Engineering Co.).
Included specifically in the foregoing, but not by way of limitation, is any
expense or liability of Employee, of any conceivable nature, which may arise
under or in connection with the litigation pending in the Grand Traverse
County, Michigan 13th Judicial Circuit Court, Civil Action No. 96-14,861-CZ.
The undertakings of subparagraphs (a) and (b) above, are independent of, and
shall not be limited or prejudiced by the undertakings of this subparagraph
(c).
(d) The Corporation further represents and warrants; (i) that Employee is
and shall continue to be covered and insured up to the maximum limits provided
by all insurances which the Corporation maintains to indemnify its directors
and officers (and to indemnify the Corporation for any obligations which it
incurs as a result ofits undertaking to indemnify its officers and directors;
and (ii) that the Corporation will exert its best efforts to maintain such
insurance, in not less than its present limits, in effect throughout the term
of Employee's employment.
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(e) The Corporation hereby warrants and represents that the
undertakings of payment, indemnification and maintenance of insurance covering
the Employee set out in (a), (b), (c) and (d) above are not in conflict with
the articles of incorporation or by-laws of the Corporation or with any validly
existing agreement or other proper corporate action of the Corporation.
SECTION 9. Termination.
(a) Termination by the Corporation Other Than For Material Breach or
Other Just Cause: If the Corporation should terminate Employee's employment
during the term of employment for other than material breach of this Employment
Agreement or "just cause," as herein defined, Employee shall have no obligation
to seek other employment in mitigation of damages in respect of any period
following the date of such termination and Employee shall be entitled to
receive from the Corporation 100% of the full base salary, and all fringe
benefits, to which Employee would otherwise have been entitled through the end
of the six (6) year term of employment, which shall be payable to Employee, in
monthly installments, without regard to, or reduction because of, any other
compensation or income which Employee receives or is entitled to receive,
whether from the Corporation or otherwise. It is stipulated that any payments
made in accordance with the foregoing shall be paid to and received by Employee
as liquidated damages for the unwarranted termination of his employment and not
as penalties and he shall be entitled to receive no further sums under this
Agreement except such as have accrued as of the date of such termination or as
otherwise specifically provided in this Agreement. In addition, if any time
during the term of employment, Employee is not elected
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or appointed as the President and Chief Executive Officer and as a
member of the Board of Directors of the Corporation, or if Employee is removed
from such office or from such directorship, or if at any time during the term
of employment, Employee shall fail to be vested by the Corporation with the
powers and authority of the President and Chief Executive Officer of the
Corporation, as described above (except in connection with a termination for
material breach or just cause as contemplated by paragraph 9(b) of this
Agreement) or if the ownership or control of the Corporation, including,
illustratively, the power and right to elect a majority of the Board of
Directors of the Company becomes vested, directly or indirectly, in another
corporation, or the corporate headquarters and principal place of business of
the Corporation is changed to a location more than twenty (20) miles from
Traverse City, Michigan, without Xxxx X. Xxxxxxx'x consent, then Employee shall
have the right, by written notice to the Corporation to terminate Employee's
service hereunder, effective as of the last day of the month of receipt by the
Corporation of any such written notice, and thereafter Employee shall have no
other obligation under this Agreement. Employee's termination of services as
provided in this paragraph shall be treated as a termination of employment by
the Corporation other than for material breach or other just cause and
Employee's rights to ongoing compensation shall be governed by the provisions
of this paragraph.
(b) Termination by the Company for Material Breach or for Just Cause:
"Just cause" shall mean willful misconduct, embezzlement, conviction of a
felony, habitual drunkenness or excessive absenteeism not related to illness.
Should Employee's employment be terminated for a material breach of this
Agreement or for "just cause," the
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Corporation shall be obligated to pay Employee's then base salary only
through the end of the month during which such termination occurs, plus such
other sums and/or benefits as have accrued to Employee as of the end of such
month.
(c) Termination by Employee. It is agreed that if during the term of
employment Employee concludes, because of changes in the composition of the
Board of Directors of the Corporation or material changes in its policies, or
because of other events or occurrences of material effect, that Employee can no
longer properly and effectively discharge Employee's responsibilities as
President and Chief Executive Officer of the Corporation, Employee may at any
time resign as Director of the Corporation and from his position as President
and Chief Executive Officer of the Corporation after giving the Corporation not
less than sixty (60) days prior written notice of the effective date of
Employee's resignation. Any such resignation shall not be deemed to be a
material breach by Employee of this Agreement, and shall instead be deemed to
be a constructive termination of Employee's employment by the Corporation other
than for material breach or other just cause, pursuant to paragraph 9(a) of
this Agreement, and Employee shall continue to receive his salary and benefits
as therein provided.
(d) Termination by Death. In the event of death of the Employee
during the term hereof, the legal representative of Employee shall be entitled
to the compensation provided for in Section 4 hereof for the month in which
the death shall have taken place, at the rate being paid at the time of death,
and the term of employment shall be deemed to have ended as of the close of
business on the last day of the month in which
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death shall have occurred but without prejudice to any other payments due in
respect of Employee's death or otherwise due the Employee.
(e) Termination by Disability. The term "Disability," as used in this
Agreement, shall mean an illness or accident which prevents Employee from
performing his duties under this Agreement for a period of six (6) consecutive
months. In the event of Disability, and without prejudice to any payments due
to the Employee in respect of Disability or otherwise due the Employee under
any employee welfare plan of the Corporation or any other rights Employee may
have under this Agreement, the Employee shall be entitled, for the period
beginning on the date of Disability (i.e. the date 6 months after the
commencement of the illness or accident) through the end of the 6 year term of
this Agreement, to a salary equal to one half of that which was in effect at
the commencement of the illness or accident which resulted in the Disability.
The Employee's right to receive fringe benefits and other rights under this
Agreement shall continue for the 6-year term of this Agreement regardless of
the existence of a Disability.
SECTION 10. Non-Competition.
(a) During the term of employment and for one year thereafter, or, in
the event of termination of Employee's employment by the Corporation for
material breach or just cause (as defined in paragraph 9(b) above), for two (2)
years after such termination, Employee will not, without prior written approval
of the Board of Directors of the Corporation, become an officer, employee,
agent, partner, or director of any business
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enterprise in substantial direct competition (as defined below) with
the Corporation or any subsidiary of the Corporation, as the business of the
Corporation or any said subsidiary may be constituted during the term of
employment or at the termination thereof.
(b) If Employee's employment by the Corporation is terminated by
Employee (other than under the circumstances set forth in paragraph 9(a) or
9(c) above), in breach of this Agreement during the term of employment,
Employee shall not, for a two (2) year period following such termination,
become an officer, employee, agent, partner, or director of any business
enterprise in substantial direct competition (as defined below) with the
Corporation or any subsidiary of the Corporation, as the business of the
Corporation or any said subsidiary may be constituted at the time of such
termination.
(c) For the purposes of this Section 10, a business enterprise with
which Employee may become associated as an officer, employee, agent, partner,
or director shall be considered in "substantial direct competition" if, during
a year (adjusted for fractions of a year in respect of a new enterprise) when
such competition is prohibited, its sales of any product or service which is
competitive with a product or service sold by the Corporation or any subsidiary
of the Corporation amount to more than either ten percent (10%) of its total
sales or more than One Hundred Thousand Dollars ($100,000). This Section 10
shall not prohibit Employee's participation, in the manner set out above, in
any enterprise during the above-mentioned time periods following the
termination of Employee's employment with the Corporation if prior to such
participation by Employee the Corporation and all of its subsidiaries shall
have ceased engaging in and carrying on all businesses of such enterprise which
would otherwise be subject to this paragraph.
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SECTION 11. Non-Disclosure and Non-Solicitation. Without limiting
Employee's obligations under any other written agreement he may have given the
Corporation, Employee shall not, at any time during, and for two (2) years
following, Employee's employment with the Corporation, disclose or use, except
in the course of Employee's employment with the Corporation in the pursuit of
the business of the Corporation or any of its subsidiaries or affiliates, any
confidential information or proprietary data of the Company or any of its
subsidiaries or affiliates, whether such information or proprietary data is in
his memory or embodied in writing or other physical form. Employee shall not
solicit any employees of the Corporation to change their employment during this
2 year period.
SECTION 12. Vacation. The Employee shall be entitled annually to six
(6) weeks of paid vacation. In addition, the Employee shall also be entitled
to all paid holidays given by the Corporation to its executives generally.
SECTION 13. Release. For and in consideration of Employee's future
services under this Agreement, and as a material inducement to cause Employee
to enter into this Agreement, the Corporation hereby releases Employee from any
and all claims or choses in action, of any and all conceivable nature or
natures, which the Corporation, or Olmsted Engineering Co., now has, or may
hereafter acquire, against Xxxx X. Xxxxxxx, where such claim or chose in action
is based, in whole or in part, on any action or inaction of Xxxx X. Xxxxxxx,
whether known or unknown, which may have occurred, or be alleged to have
occurred, at any time prior to the effective date of this Agreement, save only
those claims or choses in action which are based upon facts, the alleged
existence of which are: (i) unknown and unheard of by and to any of the
Corporation's Board of Directors (other than
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Xxxx X. Xxxxxxx) as of the time this Agreement is signed, and (ii) have
been actively concealed by Xxxx X. Xxxxxxx; and (iii) relate to egregious bad
faith, active fraud, embezzlement, or substantial and material dishonesty by
Xxxx X. Xxxxxxx. Conversely, Employee hereby releases the Corporation from any
and all claims or choses in action, of any and all conceivable nature or
natures, which he now has, or may hereafter acquire, against the Corporation or
Olmsted Engineering Co., where such claim or chose in action is based, in whole
or in part, on any action or inaction of the Corporation or Olmsted Engineering
Co. which may have occurred, or be alleged to have occurred, at any time prior
to the effective date of this Agreement, save only those claims or choses in
action which are based upon facts, the alleged existence of which are unknown
and unheard of by and to Xxxx X. Xxxxxxx as of the time this Agreement is
signed; provided, however, nothing contained in this paragraph shall serve to
release the Corporation or Olmsted Engineering Co. from any written contractual
or bylaws commitment made to Xxxx X. Xxxxxxx, including any commitments made in
this Agreement.
SECTION 14. Miscellaneous. This Agreement shall inure to the benefit
of and be binding upon the heirs, personal representatives, successors and
assigns of the respective parties hereto. This Agreement constitutes and fully
integrates the entire understanding between the parties hereto, and is intended
to supersede and cancel all prior written or oral understandings between them
dealing with the subject matter hereof. This Agreement may not be changed
orally, but only in writing, signed by the party against whom enforcement of
any waiver, change, amendment, modification, extension or discharge is sought.
No other warranties, representations or covenants exist that are not herein
contained. All notices required or authorized under this Agreement shall be in
writing and shall be deemed to
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have been duly given on the date of service if served personally on the
party to whom notice is to be given, or the second day after mailing, if mailed
to the party to whom notice is to be given by first class mail, registered or
certified, postage prepaid and addressed to the respective parties at the
addresses set forth above, unless and until a different address shall be
furnished by any party desiring to change such address to the other party, or
if no such address is set forth with respect to any such party, then by
personal delivery or registered or certified mail, postage prepaid, to the
principal office of such party, or alternatively, the personal residence of
such party, all as last known to the party giving such notice. For each term
and pronoun used in this Agreement, the singular number includes the plural
number, and vice versa, and any gender, whether masculine, feminine, or neuter,
includes the other genders, as appropriate and as the context may reasonably
require. The invalidity of any paragraph, provision or part hereof shall not
affect the validity of any other paragraph, provision or part hereof. This
Agreement shall be construed as a whole and in accordance with its fair
meaning. Captions, if any, and organization are for convenience and shall not
be used in construing its meaning. This Agreement may be executed in one or
more counterparts, all of which shall constitute one and the same instrument
and each one of which shall be deemed an original. Each party shall, upon
reasonable request, execute and deliver such other and further documents as may
be necessary and proper to effectuate this Agreement. This Agreement shall be
interpreted and enforced in accordance with the laws of the State of Michigan,
excluding any conflicts-of-law rule or law which refers to the laws of another
jurisdiction. In the event of litigation arising under or in connection
herewith, each party consents to the exclusive in personam jurisdiction of the
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xxxxx xxxxxx xx xxx Xxxxx xx Xxxxxxxx, with venue in Traverse City,
Michigan, and the nonprevailing party agrees to pay the prevailing party's
actual attorney's fees and expenses in connection with any such litigation, in
addition to any costs, remedies or damages the court may award. This Agreement
constitutes the jointly-bargained agreement of the parties, and the
construction of this Agreement shall not be altered or influenced by the fact
or presumption that one party had a greater or lesser hand in drafting this
Agreement. Any Recitals are hereby made a part of this Agreement and all
exhibits, attachments, and schedules, if any, attached to this Agreement are
hereby incorporated herein by reference for all applicable purposes. If the
date for performance of any act hereunder falls on a Saturday, Sunday, or legal
holiday, then the time for performance thereof shall be deemed extended to the
next successive business day. Whenever it is provided in this Agreement that
days be counted, the first day to be counted shall be the day following the
date on which the event causing the period to commence occurs. This Agreement
is intended solely for the benefit of the parties hereto and their successors,
heirs and assigns, and may not be relied upon or enforced by any third party
beneficiary.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
APPROVED: VERSUS TECHNOLOGY, INC.
/s/ By: /s/ (SEAL)
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Xxxxxx X. Xxxxxxxxx Xxxxx X. Xxxxx
ATTEST
/s/ By: /s/
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Xxxxxx Xxxxxxxxx Xxxxxx Xxxxx
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/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
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